While still struggling with 9% unemployment, the powers that be in the great state of Oregon have done a remarkable job ignoring the obvious concerning job creation.

Due to abundant rainfall and a mild climate Oregon is still one of the best places on planet earth to grow trees. Prior to federal timber lands being placed off limits due to the Spotted Owl, the Willamette National Forest was the most productive in the world in terms of soft wood lumber.

We may have been willing to tolerate this environmental conceit 20 years ago, but it is a luxury we can ill afford today. Yes, demand for wood in North America collapsed after the housing bust of 2008. But there has been a surge in demand from across the globe, primarily from Asia, Japan, South Korea and China that is driving up demand for timber from the United States. And as the growth of these emerging economies continues to outstrip the west, they are going to use a lot more timber in the future.

Worldwide demand for softwood lumber rose 18% in 2010, continuing a trend that started in early 2009. In the first quarter of 2011 global wood consumption is up 20% compared to the same period last year. Environmental hubris should not prevent us from taking full advantage of this opportunity.

Support for this argument can be found from sources as far afield as legendary value-investing guru Jeremy Grantham. He claims that timberland is the single best long-term investment there is. According to Grantham, timber has risen steadily in price for over 200 years and has returned an average of 6.5% a year over the last century.

Grantham is not alone in his enthusiasm for timber. Over the past few decades, top university endowment and pension funds have plowed an estimated $40 billion into timberland. The Harvard Endowment Fund currently has about a 9% weighting in timber.

This only makes sense when you consider that trees continue to grow through bear markets, financial meltdowns, recessions and wars. Furthermore, unlike other agricultural commodities, trees do not have to be harvested. If prices or markets are not quite right, wood can simply be “banked on the stump.”

And let’s not forget that timber is a hard asset. With Ben Bernanke creating more money than God, it is increasingly important for individuals and institutions to be hedged against inflation with a portion of wealth stored in real assets.

But what good does all this stored value do if the vault remains locked? Let’s tell the political class to simplify things: This is Oregon. What do we do better than anyone else? We grow trees. So let’s put the “folks” back to work and make some real money harvesting trees and processing lumber.

Time is of the essence. Douglas Fir logs rose 19% in price in fourth quarter of 2010 alone. This will only be exacerbated by the recent Tsunami in Japan. Once ports, roads and power are working there again, demand for lumber and plywood will explode. Supplying Japan’s rebuilding needs will be a global undertaking. This could employ much of rural Oregon for years to come. Let someone else worry about turning switch grass and cow poop into energy.

Comments

Smith makes an outstanding observation. Oregon is the Saudi Arabia of Sawdust, but with minimal lumber production. Forest Service estimates that forest growth rates in Oregon exceed consumption (harvesting; forest fires) by at least 4 billion board feet annually. Harvesting timber and exporting logs is Japan and China's historically preferred methods to purchase U.S. wood. We can truly enhance local employment by moving up the value-added chain and export finished lumber and goods, rather than just the logs.

0#2Some Sense in Oregon Business for a Change!!! —
Lisa2011-06-15 10:00:36

When I began reading this guest editorial I was shocked. Actual common sense prevails for a change. I KNEW it could not have come from Ben Jacklett since he is a constant apologist for the greenies, the weenies and the fruits, nuts and flakes who run this wonderful state.

Is there truly any fear we will run out of trees? It is a renewable resource! When I graduated from college, Oregon was booming with logging, sawmills, and lumber sales. Now they've fled for the hills...or should I say the South where the environmentalists do not rule. Given the policies and silly regulations our industries are stifled. Ironically meddling in the environment to favor one species over another has failed. The Banded Owls are killing Spotted Owls regardless of our regulations!

I hope the powers that be, begone soon and we get some common sense back in Salem, Portland and the Willamette Valley. With the news that Oregon's state budget is among the most underfunded we need to get some old but new sources of revenue.

0#3Common Sense is Not Found in Either Extremes —
Michael Vaughn2011-06-18 14:56:52

I worked in the timber industry from 1978 to 1989. In the mid-late eighties, I was asked to sign a petition decrying the suggested ESA listing of the spotted owl. I refused. Thereafter, coworkers referred to me as a “commie” a “whacko” a “tree hugger” and, gasp, an “environmentalist.” Not far from the debase language Lisa uses in her failed attempt at intelligence and wit.

During 1980’s, jobs within the lumber mills were being lost not to the spotted owl, but through automation, efficacy in production, and economic woes. No one, I mean no one, was pointing fingers at the industry for lost jobs. They were praised as “smart business leaders,” innovators. During that time, I lost my job twice and went through many job “restructurings.” Most of the available big logs (old growth?) were already gone and the smart people running plywood and lumber mills retooled in order to handle the smaller logs (“pecker poles”). The ones that didn’t retool failed in a big way (closures), especially after the owl’s listing and changes in the public’s attitudes towards the timber industry’s clear-cut, slash and burn policies.

Yes, the northwest is renowned for growing trees – but it takes eons for nature to create diverse ecosystems. Habitats. The even-age harvest cycles do not allow for habitat formation. If you do not care about such healthy forests, then, by all means, argue for that. See how far that gets you in public support!

It is also questionable that tree growing, done in the manner that it was done prior to 1993, is sustainable into the future. Soil erosion will eventually outpace soil renewal.

If you’ve read this far, I’m by no means advocating that we suspend all timber harvesting, just a more sound approach; an approach that will silence the rhetoric from both extremes. The middle is where the true common sense lies.

Michael Vaughn's suggestion that jobs were lost due to automation is both true and totally unrelated to the issue of reductions in the timber INDUSTRY. Yes menial jobs were lost due to automation but were there still timber HARVESTING we might see more mills in operation. They aren't. If automation were at fault why are all of these "automated" mills shut down, mothballed or rusting away?

I also worked in the timber industry, in finance and I grew up in a mill town. It was my clients that moved south or shut down their mills, the GPs the LPs, the Boise Cascades are no longer operating the mills and production facilities of the 80s. As I reviewed the accounts of these companies, I saw the cost of timber harvest explode. With all the environmental regulations, just crossing a tiny stream became an expensive proposition. Other lands were restricted from harvesting and instead burned....now that's a great use of our natural resources.

While I agree that a middle ground...neither the tree hugger or the rape and pillage mentality need prevail. But Vaughn needs to 'splain all those shuttered, rusting millworks and why 'automation' was the nail in the coffin.

0#5Investors Should Take Lessons From the Past, Apply to the Future —
Michael Vaughn2011-06-25 12:10:00

I agree, to some extent, with Robert S. Smith’s assessment, that by investing in timberland, for the ultimate harvest of that timber, we can ease the economic impact to workers in Oregon. However, by holding in contempt those that do not agree with his quest, his mission is sure to fail.

Times have changed. Along with this change comes the enlightenment of the American people on how the health of the environment is directly connected to our wellbeing. It is not just “environmental hubris,” as he so wrongly defines it. EH did not force mills to retool because they ran out of large logs due to over harvesting; EH did not silt our streams, block fish passages, and fracture forest ecosystems (which, by the way, Lisa, led to the Barred Owl getting a foot-hold in the Northwest in the first place).

Smith fails to see other values in timber other than making money for a few. He, and others, needs to face the facts: Timber harvesting on national lands will never return to pre 1993 levels – with or without the spotted owl. A more diverse constituency now uses our public forests than at any time in the past – and this constituency will only increase, not diminish.

A new paradigm is on the horizon. It is a vision that is local, regional, and global in scope. It should make more economic sense to Smith to accept and work with this new way of thinking, rather than to beat the drums of confrontation.

I do hope that lumber mills, closed during this last economic downturn, reopen at full capacity. It would be dire to our state if they do not, because a diverse economy is a healthy economy.

P.S. (Lisa, you conveniently leave out the fact that many large timber companies wax and wane from region to region. They exhaust the resource and move to where the resource is more abundant. The more abundant, the cheaper it is to extract. I concede that they did move south, but only after they exhausted their own timber lands, and most of the public’s available timber. They’ll be back.)

Oh Michael, you have conveniently forgotten or maybe didn't know that the days of leveling the forests and then moving on are in the far distant past. Forest products companies are required by law, if not by smart business practices to clean up and replant the areas harvested. If you think we closed the mills because there are not any trees, you need to take a flight over the state. As the original essay noted, Oregon is the Saudi Arabia of trees. There is no shortage of timber but because of environmental restrictions and increased costs much of this land is off limits...again as noted by the original editorial.

And believe it or not I am a heavy user of forest lands for hiking and skiing. I am happy we have some beautiful and pristine forests for recreation and spotted owl breeding grounds (if the banded owls don't kill them first). However to claim that the mills are closed because all the trees are gone defies reality.

0#7Forests are a Rewnable Resource ? How do we know? —
Michael Vaughn2011-06-27 23:53:45

I apologize for this long-winded post in advance… it will be my last.

(There you go again, puttin’ words in my mouth, Lisa! [Are you related to Lars? :-)] I know “it’s the economy stupid” that is to blame for the latest round of mill closures. And I know that many mill closures came after the spotted owl, [also the marbled murrelet, and later salmon], due to the fact that logging on national lands came to a standstill. I also know that in the early to late 1980’s I worked at two different mills that retooled because they had trouble securing a consistent supply of larger logs. I know that environmental restrictions are burdensome, but also needed BECAUSE of our “far distant past” (which, by the way, isn’t so distant), and what we have learned since. Should these environmental/industry calamities give us pause? I say yes.)

First, it is the Barred Owl (Strix varia) and not the Banded Owl as you have stated (twice in fact).

Second, what is the private timberland harvest cycle right now? Thirty, forty years? Even though landowners are required to replant harvested lands, those short harvest rotations do not allow a forest to grow. Trees yes, forests no. And, then the question becomes: What defines a forest? At what age do trees, and the many, many other species associated with those trees, become a functioning forest? Or do we want that? Hey, it’s the landowners land, right? They can do with it what they wish. I agree to a point. But their actions affect all of us! Others have raised these questions: Are these short rotations sustainable for the long run? At what point does the land become unproductive? Is soil erosion a limiting factor for sustained timber production?, or is it nutrient loss? And, I assume, many other such questions.

However, in national and state forested lands the bar should be set higher. Why? Because we all own it, multitudes of us use it, and we all benefit from healthy forest ecosystems. This is what the Multiple Use – Sustainable Yield Act of 1960 defines for our National Forests.

It would be a hard sell going back to sixty-to-eighty year rotations on these national lands. Yes, the timber is starting to come back, but slowly. It has only been 20 years since logging was halted, or otherwise restricted from these lands. Is that long enough? I don’t know. What I do know is that we cannot, and should not, treat public lands as if they were privately held.

Lisa, I, too, am in the woods a lot. I hunt, fish, pick wild mushrooms (my passion) and other wild edibles and non-forest products, hike, camp, sightsee, and generally explore; I enjoy this great state. I use the Willamette and Mt. Hood National Forests, the North Santiam State Forest, and numerous privately held timberlands the twelve months of the year. But what I see is far from your experience, I imagine, of groomed hiking trails and snow-packed ski runs ;-{}

Oh well, as you sow, so shall you reap or something like that. Too bad global timber demand is soaring while the Oregon timber people are all unemployed and Oregon obviously doesn't need any tax revenue.